As 2022 comes to a close we’d like to take this time to recap on the year that was and our predictions for 2023. We had another busy year for Upstate Commercial completing over 245 commercial sale and lease transactions.
- Average Sale Price for 2022 = $2,275,000
- Average Lease Price for 2022 = $46,500 + GST
Below are a few of our sales achieved in 2022.
Commercial Real Estate reported to Upstate that we were the number one agency for listings and the number of views on their website. The number of views Upstate attracted from our listings was over 3 times more than their number 2 agency. This proves the size of the business and the way we present properties, is benefiting our owners that list through Upstate with faster transactions and a greater choice of buyers and tenants.
With over 35% market share across the Northern Beaches we’ve identified the latest movements and trends for commercial property markets.
Warehouses
The year remained strong for warehouses up to the one and a half million bracket. The main buyers are owner occupiers with quite a few being downsizers who were selling their family homes to move into an apartment and keep their toys.
Other buyers were small businesses that were doing well and expanding. With a distinct lack of stock, these buyers are paying more than investors to secure a place for their business as they know it will give the business security and will be a long-term hold.
Investors needing to borrow were not so successful in securing warehouses as they are unable to justify the yields against commercial lending rates and are seeking circa 5% Net. On the flip side investors who are cash buyers are still seeing value at .5 – 1% below cap rates of borrowing investors.
For investments with shorter lease terms that an occupier could access within a year or so, warehouses are being sold on even tighter yields of 1.25 – 1.75% less that average investment yields depending on the tenancy duration.
Retail
Tenanted Retail is still attracting investors around the 5 – 5.5% range depending on the type of tenant, term of lease and location of the property. Strong retail locations including places like Manly, Dee Why and even small suburban retail centres are performing well and still have interest with a wide array of investors. As has historically been the case the owner occupier market for retail is a bit of a mixed bag with some businesses keen to secure themselves a position but typically in smaller suburban retail centres with the main retail centres still being dominated buy investors and tenants.
Offices
For the smaller investors, offices were popular as they attract buyers that can’t afford to get into the residential market. These were being sold at around 5% – 6% returns. The higher the yield of course, the greater the risk and it has been slower on the leasing side for these properties in areas like Belrose, Frenchs Forest and Warriewood. However strata office vacancy rates in Dee Why and Manly are at all time lows with a big uptake on space getting people out of bigger offices in the CBD and out from working at home.
Commercial Real Estate Outlook
Savvy vendors wishing to sell are seeing the benefits of listing early next year to reduce the amount of competition. It’s hard to predict but at this point it looks like the first quarter of 2023 could see a high number of transactions. If you wish to do the same and get in early to take advantage of having less competition, call today for an obligation free appraisal and advice on the right sales methodology for your property.
The Upstate team
